I agree that the article does pre-suppose that young adults will misuse a credit card co-signed by parents. The reason I used that as a frame of reference as I knew of at least a dozen friends in university who held true to this assumption. Sure, not everyone is like this, but I simply wanted to highlight one side of the story.

There are clearly multiple sides to this story and a number of you have touched on them.

Just wanted to say that all of you have made outstanding points and thank you for all the comments.

I know a lot of my friends had their parents help them build their credit and got a head start – but I’m glad my parents didn’t because I feel good that I built everything on my own.

And that goes with purchasing my own car and paying my way through college.

So I think in the end – the best way to go about this with your children is to support them – but let them be responsible for their own finances.

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I have a student loan that was co-signed by my mom, because I didn’t have enough credit at the time to qualify on my own. Due to how I was raised, it never occurred to me that this meant I could skip out on payments and she’d be responsible for it (in my mind, that situation cannot exist) – all it meant was a way to encourage the bank to let me borrow the money. I make every payment on that loan, because it’s my loan. Not a complicated issue.

My attitude likely comes from my teen years when my parents did not have the financial means to co-sign for anything. I worked, I saved and I did not use credit to purchase anything until my first home at 27 years old and a new vehicle at 32 years old.

Maybe I am just bitter and jealous. :)

I think a parent has to make the judgment call based on the child’s personality.

This is a part of growing up and kids need to do it on their own.

Also authorized users do not build credit. Check your credit report, you will see quite obviously that the primary account holder has a credit card listed and the authorized user does not. This is a very common misconception and can sometimes be very dangerous. Should anything happen to the primary credit holder (often the primary wage earner) the other people have not built up credit and are often in trouble.

Prepaid credit cards are incredibly hard to use online. Many actually prohibit online use. Due to the whole billing address verification done online it is terribly difficult to use. Some prepaid cards have the option to register them for online use but that is a hassle (plus maybe receiving more junk mail). If you are regularly purchasing online (or your child) a proper credit card does reduce the hassles.

Depending upon the bank or credit card issuer a co-signed card won’t build the child any credit either. This is important to check and verify after you sign up. The sales person will say any number of things that may be completely wrong. 6 months after signing up and using the card, pull your child’s credit history (free once a year) and confirm that the credit card is listed. If not then credit is not being built and the co-signed card is not helping at all.

Also, by law you can give your credit card to your child to go to the grocery store for you (temporary authorized user). They should sign using their own signature though (although technically you can authorize them to forge your signature, I don’t think that is a road that should be traveled though). This sort of thing wouldn’t be accepted by an electronics store and many others confirm, but most grocery stores are not so strict on their credit card policies.

The summation of it: Proper parenting – teaching some SIMPLE lessons about credit (don’t buy what you can’t pay for with cash NOW, and don’t carry a balance), limiting access to credit ($500 limit), seetting rules (this is for gas, emergencies, or if you don ‘t enough cash ON HAND), and monitoring spending (looking at the bill every month) can alleviate most of the concerns about credit cards for kids. And debit cards can be more dangerous by far.

It is important to know because I know many couples (especially older) where the wife thinks she had excellent credit because “they’ve” had cards in good standing for years. Sadly, only her husband gets the credit, so to speak.

When I was 18, I applied for a mastercard and was given a $500 limit. At the time, this was sufficient to by concert tickets via ticketmaster. Then when I went to school, I asked for and was given a limit increase to $2000. This helped me pay for tuition and other bills, computer, etc. Even when I had a big ticket item to buy, I would pre-pay the card so my limit was not reached.

The card was always paid in full at the end of each month. I was taught that if you don’t have the money now (or at the very least in the next month), you cannot charge it on a credit card. The 20% interest charges are usurious and there is no reason for you to give up your hard earned money to a credit card company, when they are making a percentage off every charge you make from the retailer anyway.

There is no need for kids below the age of 18 to have a credit card for their own personal use, if needed for online usage, then a pre-paid credit card should be fine. Maybe a consideration could be made for sending your kids out to the grocery store to buy some milk, but really, you could just as well give them cash or “loan” them your debit card and trust them with your pin.

If kids are given everything, then they will never be self-sufficient and will always rely on the parents to bail them out. This is why it’s not uncommon to see 30 year-old adults still living with their parents.